DEGRADING MARKET

According to degradable plastics suppliers, manufacturers were working at full capacity and still could not meet the sudden explosion in demand. Many factories said they are months behind schedule. 　

In January 2020, China implemented a strict, timetabled ban on single-use plastic bags. Shopping malls, supermarkets, drugstores, bookstores and takeout delivery services in provincial-level cities and provincial capitals had to cease using non-degradable products, including plastic bags and straws, by the end of 2020, after which the ban broadened in scope. 

Degradable plastics, a category which includes biodegradable plastics that can be broken down with the help of living organisms, mostly depend on chemical additives that accelerate degradation when exposed to specific catalysts, such as oxygen, heat and ultraviolet (UV) light. 

“Supply of degradable plastics is expected to improve a lot by the end of 2021,” said Ji Junhui, chief engineer at the National Engineering Research Center of Engineering Plastics. “But it’s worth noting that the production capacity for established and approved [degradable products] projects is already sufficient. If capital continues to flood in, there will be serious oversupply.” 　

Industry insiders told NewsChina that the market was sluggish for years and production capacity of degradable materials and products was limited. Many companies that entered the field early on were forced out due to lack of orders until a surge in 2019, shows data from consultancy Zhongjin Qixin. 　

“At the end of 2018, a bunch of degradable plastic suppliers went bankrupt due to severe overcapacity. As a result, companies are cautious about entering the arena,” said Li Erqiao, general manager of a leading drinking straw supplier in Yiwu, Zhejiang Province. 　

“Before the policy took effect in 2020, domestic demand was small. Eighty percent of our materials were sold overseas,” said Guo Defan, a sales manager of Kingfa Science and Technology, one of the largest suppliers of degradable materials in China. 　

“We’ve received daily orders for degradable plastic bags since the end of 2020,” said Hao Jiahua, vice chief manager of a producer in Suzhou, Jiangsu Province. “Due to capacity limits and the Chinese New Year holiday, our factory is already operating at full capacity and still has to delay orders.” 　

“There are shortages of both manufacturing equipment and raw materials,” he added.　

Hao said his company has been able to produce degradable plastic bags since June 2020. “But when we promote the products to clients, most of them took a wait-and see attitude [about the ban]. It wasn’t until around December that orders began coming in,” Hao said. 　

According to Hao, higher prices deterred customers at first. Even degradable bags, which are the cheapest plastic bag substitute, are double or triple the price of conventional plastic bags. “So customers were not willing to make a change before the policy landed. Our clients, mainly supermarkets in Zhejiang and Jiangsu provinces and Shanghai, responded more quickly out of consideration for their corporate images. But others started to take action only after feeling the pressure from random inspections and fines.” 　

The surge in demand for degradable products quickly spread through the supply chain. Supplies of raw materials for degradable plastics, such as PLA (polylactic acid, a polyester made from biomass), PBS (polybutylene succinate, a petroleum-based polymer) and PBAT (polybutylene adipate terephthalate, a biodegradable copolymer), all ran short, which further increased prices. 

“The severe imbalance in supply and demand sometimes doubled or tripled prices throughout the entire degradable industrial chain, from raw materials and processing costs to retail,” Ji Junhui told NewsChina. As an example, Ji said PBAT prices went from around 19,000 yuan (US$2,943) per ton in November 2020 to around 28,000 yuan (US$4,337) in February 2021. 　

He pointed out that some manufacturers are seizing the opportunity to price gouge, which will affect the overall industrial ecology. “But it’s predictable that as more companies and projects join in, supplies will increase and prices will return to a reasonable range,” Ji said.　

But as demand soared, substandard products at lower prices also emerged. 　

“Some so-called degradable products are actually disputable in terms of technology,” Wang Zhanjie, vice president of the China Plastic Processing Industry Association, told NewsChina. 　

Degradable plastics is an umbrella term that can be misleading, as there are major differences in not only how each product degrades but also how it impacts the environment. In China, degradable plastics generally include PLA, PBS and PBAT, as well as non-bioplastics such as oxo-degradables, which degrade in the presence of oxygen, UV light and heat, and photo-degradable plastics that crumble into a powder when exposed to light. Others are partially bio-based like starch blends, which are conventional plastics with starch additives to aid degradation. 　

Some of these bioplastics require specialized composting facilities to process safely and are not practical for general mixed-waste use, as they can leach eco-unfriendly polymers like PE (polyethylene), PP (polypropylene) and PVC (polyvinyl chloride) in the degradation process, which contain heavy metals used as stabilizers. Worse still, they are invisible to the naked eye and can remain in the ecosystem for years, causing more detriment to the environment. 　

“These materials are merely conventional materials with all kinds of additives. They do not meet the standards for degradable products,” Ji said. 　

Ji said that there are usually three indices for assessing degradable materials: degradability rate, what substance they convert to and heavy metal content. Strictly speaking, a material cannot be called degradable unless it performs well in these metrics. 　

However, dubious products manage to circulate in the market because China lacks unified standards for degradable plastics. There are standards for biodegradable bags, degradable disposable tableware and plastic bags that decompose using microorganisms, among others. While the standards cover plastics made with degradable raw materials and polymers, each have different content and degradability rate requirements. As a result, regions and companies produce degradable plastics according to different sets of standards, which affects quality. 　

In September 2020, the China National Light Industry Council published a guidebook to regulate and classify degradable plastics. It stipulates that only materials with a degradability rate of over 90 percent and which meet heavy metal content requirements can be called “degradable” and bear the official logo of two Js (which stands for jiangjie, or “degradable” in Chinese). The guidebook, though widely acknowledged as authoritative, leaves some questions unanswered, such as who can use the logo and the process of becoming certified. 　

“The guidebook is an interim document for the industry. It’s urgent to formulate a set of unified standards to resolve existing disputes and problems. There should be workable means for people to judge whether a material is degradable,” Wang said. 　

“Personally, I hope the authorities release a unified technical standard to guide the industry. Different provinces are adopting different standards which has caused some chaos. This will deliver a heavy blow to the industry,” Ji said. 　

Against soaring stock prices is the increasingly concentrated input in degradable plastics. Jinfa Technology, one of the leading companies whose stock price hit a new high in January, announced in the first half of 2020 that it had sped up building new capacity and was exploring new biological degradable plastics to apply in more fields. Its new PBAT production line is slated to begin production in 2021. 　

“Our capacity increased 10 times in January compared to the same period last year. We’re expected to reach 180,000 tons of PBAT by the end of 2021,” said Guo Defan, sales manager for Jinfa Technology. 　

Hengli Petrochemical, a private chemical giant and refinery in Dalian, Liaoning Province, announced the signing of two projects involving biodegradable plastics in the first two months of 2021 that promise annual output of over 900,000 tons. Two companies already under construction in Shandong Province announced a project with annual output of over 300,000 tons. This year, projects in Sichuan, Shandong and Guangdong provinces are estimated to produce over 200,000 tons of PBAT. 　

Meanwhile, new players are joining the fray. In December 2020, Sinopec Capital, an investment company established by China Petrochemical Corporation (Sinopec Group) and China Petroleum & Chemical Corporation (Sinopec Corp), announced it intended to invest in Zhejiang Hisun Biomaterials, a PLA producer. 　

Data from company data platform Tianyancha shows nearly 8,400 companies are involved in degradable materials. In 2020, almost 2,300 new companies joined the arena, an increase of 38 percent over 2019. 　

“At this rate, it’s possible we’ll see oversupply by the end of 2022,” Ji said. “For the time being, there is already sufficient capacity, as seen from the established and planned projects. If the shortage of supply continues to be played up and more hot money is allowed to flood in, the industry will be a mess.”